Commercial banks in Rwanda reported mixed results in the nine months to September, with Ecobank Rwanda joining the group of nine banks that returned a profit, together representing a 21.8 per cent growth from $36 million to $43.8 million, while new entrants struggled.
Ecobank Rwanda, which reported a loss of Rwf1.9 billion ($2 million) in the nine months to September 2017, posted a Rwf1 billion ($1 million) net profit in the same period this year.
Those that did not fare well — Commercial Bank of Africa (CBA), three microfinance banks and the Development Bank of Rwanda — reported a combined Rwf8.3 billion ($9.3 billion) in net losses.
Bank of Kigali, I&M Bank Rwanda, Equity Bank Rwanda, Bank Populaire du Rwanda and KCB Rwanda led the group of banks that posted profits.
According to the results, almost half of the commercial banks’ profits were generated by Bank of Kigali, which is riding on its large capital base to finance corporate clients, its countrywide presence to serve the retail segment and its technology-driven banking platform to beat competition.
Bank of Kigali reported a net profit of Rwf19.7 billion ($22 million) in the first nine months, which is an 11.1 per cent increase from the Rwf17.6 billion ($19.7 million) reported during the same period last year.
The bank’s credit book grew by 10.6 per cent in the nine months to September, compared with the same period last year, from Rwf471 billion ($528 million) to Rwf500.7 billion ($561 million).
Bank Populaire du Rwanda posted a net profit of Rwf2.15 billion ($2.4 million) in the nine months to September compared with Rwf134.6 million ($151,349) reported same period last year.
“We are coming from a very poor performance history. We are getting our fundamentals right from revenues, non-performing loans and costs,” said Maurice Toroitich, managing director Bank Populaire du Rwanda.
I&M Bank Rwanda reported Rwf4.9 million ($5.5 million) net profit, compared with Rwf4.8 billion ($5.3 million) last year while Equity Bank made a net profit of Rwf4.5 ($5 million) compared with $2.8 million reported in the same period last year.
I&M Bank Rwanda and Equity Bank Rwanda also kept the non-performing loans in check while growing their loan books. For example, I&M Bank Rwanda non-performing loan ratio averaged 2.9 per cent in the nine months to September, which gave it leeway to lend more and invest in in money markets, thereby improving its net interest and similar income which expanded by 24 per cent.
KCB Rwanda profits grew from Rwf2.2 billion (2.4 million) nine months to September 2017 to Rwf2.6 billion ($2.9 million) during the period under review.
The lender, however, recorded an increase in non-performing loans, from from Rwf3.5 billion ($3.9 million) to Rwf7 billion ($7.8 million in the nine-month periofd.
While KCB’s bad loans ratio increased to 5.7 per cent from 3.1 per cent, the bottom line gained because there was less impairment compared with last year.
Cogebank’s profits fell from Rwf3.9 billion ($4.3 million) in the nine months to September last year to Rwf2.7 billion ($3 billion) in the first nine months of this year.
The bank’s earnings took a hit after it spent Rwf2.9 billion ($3.2 million) implementing IFRS 9, the global accounting standard that requires lenders to provide for both good and bad loans.
Other banks that reported a growth in profits were Guarantee Trust Bank and Access Bank.
CBA, which started trading as a commercial bank last year after acquiring Crane Bank, reported a Rwf2 billion ($2.2 million) loss in the nine months to September compared with a loss of Rwf845,155 ($948,764), during the same period in 2017, even as its loan book expanded to Rwf4.6 ($5 million) from Rwf3 billion ($3.3 million) last year.
“There were material changes as a result of this transaction resulting in additional capital, property and equipment expenses,” says a note by chief executive officer Lina Higiro.
Development Bank Of Rwanda (BRD) reported a Rwf4.9 billion ($5.5 million) loss, from the Rw234 million ($262,512) loss it recorded during the same period last year.
In order to reduce its exposure, the bank says it plans to withdraw from 10 of the 30 companies in Rwanda in which it has shareholding.
BRD’s published results for the nine months to September show its earnings from fees and commissions plunged while the net interest income remained relatively strong.
However, BRD’s non-performing loans remained double-digit, reaching 18.93 per cent which is more than the central bank’s 5 per cent benchmark, which reduces the banks’ capacity to lend as it has to provision for the loans.
BRD reported Rwf39 billion ($44 million) non-performing loans during the period, which means shareholders.
The results also show that microfinance institutions are also struggling, weighed down by losses and non-performing loans.
Unguka Bank, AB Bank and Urwego Bank reported a combined Rwf1.3 billion ($1.4) loss, largely due to scaled down lending to micro borrowers after their revenues took a hit in year in 2016 and 2017 due to bad weather, which destroyed crops and slowed economic growth.
The Urwego Bank’s interest income dipped 9 per cent; fees and commissions fell by 10 per cent and credit to the private sector dropped 27 per cent — business streams which are crucial for lenders to post a profit.
While its income improved in the first nine months to 2018, Urwego reported a Rwf675 million ($757,548) loss, from the Rwf980 million ($1 million) it recorded in the same period last year.